The abrupt shuttering of The Messenger Jan. 31, with many employees finding out via a report in The New York Times and with stories on the website suddenly going dark, has left a lot of fallout. There’s a lawsuit from former employees alleging the company violated layoff notice rules, plus a lot of public comments from employees about the way the abrupt rug-pull left them up the creek, including with loss of severance pay and healthcare coverage and even without the ability to access their clips thanks to the website shutdown.
Now, The Messenger founder and CEO Jimmy Finkelstein has spoken to Axios’ Sara Fischer about what happened with the company. But he insists to Fischer that it would have been profitable in just a few months if they had gotten the investment he was seeking.
Exclusive: Part 1/ I spoke w @TheMessenger CEO Jimmy Finkelstein about how the outlet spent its way to oblivion, his regrets, what’s next https://t.co/Kk00XPiW6a
— Sara Fischer (@sarafischer) February 13, 2024
Fischer’s two pieces here have many incredible revelations. To start with, he indicates they were close to a deal to sell the company to The Los Angeles Times, saying “I can tell you that we had legal papers completed at 4 in the morning, the day the site went under.” That’s interesting considering the LAT’s own recent massive layoffs, but not out of the realm of plausibility given LAT billionaire owner Patrick Soon-Shiong’s resources and statements about trying to pivot that paper to new approaches.
Finkelstein doesn’t expand on what happened with the LAT, but says “I was making calls until 2 or 3 in the afternoon.” He also adds that some other investors were committed to putting more into the site if he was able to bring in investment. And he says he declined a $30 million offer for majority control from a conservative investment group because that deal “really didn’t feel right” given The Messenger’s stated focus on down-the-middle politics (although they had plenty of other coverage as well, including in sports, which is why we’ve been covering them).
But beyond what happened at the end, there are a ton of details here from Fischer on what went wrong for the company overall. The $20 million in investment Finkelstein was searching for here? They burned through that exact figure in their first six months thanks to…not having a website:
Finkelstein blamed his financial woes on launching the company six months behind schedule in June. That meant the Messenger burned through $20 million before the business could ramp up.
“We had a large group of people for that six months were not developing a website,” Finkelstein said.
Asked why he started so late, Finkelstein said, “We didn’t get the complete staff that we wanted. … And that really was the majority of the $20 million that we sought at the end.”
That seems very not ideal. And it raises questions about if Finkelstein’s claims on the path to profitability (saying they would have gotten there perhaps as early as June and certainly by August if they’d received the $20 million they were looking for in January, “I have absolute confidence that by August we would have been profitable”) can be believed. And another element that adds to the case for skepticism is how Finkelstein addressed comments provided to reporters in the past.
Finkelstein told Fischer The Messenger booked as many advertisers for 2024 in January as they had in all of 2023. That’s different from the assertion in New York Times reporter Ben Mullin’s January piece on the publication’s dire finances. There, Mullin wrote that “Kimberly Bernhardt, a spokeswoman for The Messenger, pushed back on the idea that the company was under ‘dire’ financial strain, adding that The Messenger booked as much revenue in January as it did all of last year.”
On that front, Finkelstein told Fischer “We booked as many advertisers, as we had booked for the months before…The revenue would have come” and “That is either the wrong quote or he interpreted that wrong.” But Mullin told Fischer this was not an interpretation mistake. And Fischer adds that “a source formerly with the company who is familiar with its finances told Axios that figure was intentionally misleading and was provided at the direction of Finkelstein.”
With the site’s collapse, we’ll never actually know if The Messenger could have turned the corner to profitability. That’s a difficult path, especially for large outlets; The Athletic has lost money every year since its 2016 founding, and while its losses have narrowed, it’s still losing millions quarterly. (Of course, that doesn’t take into account other elements, such as the $550 million The New York Times paid to acquire the publication in 2022 and the other benefits they get from it, such as bundling potential and the controversial move to replace their unionized sports department with non-union Athletic writers.)
Yes, some digital outlets are able to turn profits quickly. That includes journalist-owned companies 404 Media (former Vice Motherboard tech staffers) and Defector (former Deadspin staffers), which have publicly said they’re profitable after six months and a year respectively (and continue to cite specific profits in that latter case). But it’s unclear exactly how The Messenger and its giant and often well-paid staff (Finkelstein told Fischer salaries were 82 percent of their costs) could have reached profitability within a year. And Finkelstein’s suggestions on that front sounded quite unconvincing to many:
So many amazing nuggets in this @sarafischer interview, so you'll each have your favorite. Right up at the top has to be this belief that automated ad sales would drive revenue through the roof. https://t.co/tTnNQ0qsjM https://t.co/qDk7D7436N pic.twitter.com/AtJbOPiDAy
— Bill Grueskin (@BGrueskin) February 13, 2024
At any rate, this adds to the conversations around The Messenger. It seems highly unlikely the site is coming back in any way, and there are still discussions about what’s ahead on the severance, healthcare, and legal fronts. Finkelstein told Fischer “There are some things I might consider doing” and “We are gathering all of our assets and we’ll see what happens” without more specifics, but he did call a GoFundMe set up by ex-employees to help those left without severance “wonderful.”
To date, that fundraiser has raised $23,435 of its $50,000 goal. As for Finkelstein and his multi-million net worth (much of which was made buying and selling media companies), it’s unclear what’s next; he did say he put in “millions” towards the end with The Messenger, but didn’t offer more specifics. And he didn’t rule out launching another media venture, although he did say “It’s hard to say you’re going start another media company when this was a great media company to be.” It apparently wasn’t great enough for it to survive, or to pay its employees what their contracts said they were owed, though.
[Axios]
